Clothing brands face tough call on Bangladesh

Lana Nguyen, right, holds up a shirt while helping friend Chris Ghiathi, left, shop in an H&M store last year in Atlanta. Global clothing brands involved in Bangladesh's troubled garment industry responded in starkly different ways to the building collapse that killed more than 900 people. Some quickly acknowledged their links to the tragedy and promised compensation. Others denied they authorized work at factories in the building even when their labels were found in the rubble. FILE PHOTO: THE ASSOCIATED PRESS

The April 24 collapse of a Bangladeshi garment factory is focusing international attention on U.S. and European retailers that hire subcontractors in the Southeast Asian nation. The disaster killed more than 950 workers and injured 2,500.

With some 4,000 clothing plants, Bangladesh is the world's largest apparel exporter after China.

Teresa Nersesyan is an independent Long Beach supply-chain consultant to the clothing industry and a former vice president of Global Logistics & Trade Compliance at Pacific Sunwear, the giant retailer headquartered in Anaheim.

She spoke with the Register about the potential impact of the Bangladeshi disaster on Orange County retailers and consumers. Here's an edited version of the conversation.

Q. Do Orange County companies make clothes in Bangladesh?

A. It is easy to see if local brands are sourcing in Bangladesh by simply visiting stores and looking for labels that say “Made in Bangladesh.”

Q. Garment company auditors have monitored suppliers for years. So why did this happen?

A. Auditors are not engineers. They can say whether a building is unventilated when it is too hot. But they don't look at walls. Building safety is a whole other matter. Bangladesh is one of the most corrupt countries in the world; building codes and fire codes are not enforced.

Q. Building fires and other accidents in Bangladesh have killed hundreds, so why are U.S. companies still making garments there?

A. In the industry, we call it “chasing the needle.” They're chasing the dollar. Bangladesh has the lowest labor costs in the world. The minimum wage is $38 a month. But companies have to balance the risks associated with that.

Q. Are retailers responsible for the sins of their Bangladeshi subcontractors?

A. Most companies don't do business directly with factories in Bangladesh. Huge trading companies meet with you in Hong Kong. They put on a dog-and-pony show. As your agent, they say they'll control quality, produce on time and meet social and environmental standards. It is almost impossible for a brand to keep track of what's going on unless you have someone in-country who is incorruptible.

Q. So what's the solution?

A. I guarantee you that every CEO who has goods in Bangladesh right now is thinking about damage control. It is no longer OK to issue purchase orders to agents who source where they want. U.S. companies need to take ownership of their supply chains. They are responsible for due diligence. Have they sent someone on their own dime to check on their subcontractors?

Q. Some 30 Western companies reportedly had clothing in the collapsed building. Should they identify themselves and compensate the victims?

A. Everybody is hemming and hawing. No one wants to step up and have their head chopped off. Brands are thinking: why pay an injured worker for work they have outsourced? They won't say that to you. If you're a smaller brand, you don't have $5 million to dump into a fund to compensate the victims.

Q. Representatives of the Calvin Klein and Tommy Hilfiger labels are trying to enlist others in a multibillion-dollar effort to upgrade Bangladeshi factories.

A. They're having a hard time getting other brands to sign on. The hesitation is, “Oh, does that make me responsible? Wouldn't it be easier to go to Cambodia or Vietnam, where things are better?” Everybody knows about problems in China, but you don't see (950) people killed there at once. In Bangladesh, there is a total disregard for human life.

Q. What should a responsible company do if it wants to remain in Bangladesh?

Lana Nguyen, right, holds up a shirt while helping friend Chris Ghiathi, left, shop in an H&M store last year in Atlanta. Global clothing brands involved in Bangladesh's troubled garment industry responded in starkly different ways to the building collapse that killed more than 900 people. Some quickly acknowledged their links to the tragedy and promised compensation. Others denied they authorized work at factories in the building even when their labels were found in the rubble. FILE PHOTO: THE ASSOCIATED PRESS
Teresa Nersesyan, a former vice president of Pacific Sunwear, is a consultant to the apparel industry and an expert in supply-chain issues. Nersesyan says many Orange County clothing retailers carry apparel made in Bangladesh. SAM GANGWER, ORANGE COUNTY REGISTER
A Mickey Mouse garment made in Bangladesh by Disney is for sale this week on Harbor Boulevard in Anaheim near Disneyland. SARAH TULLY, ORANGE COUNTY REGISTER
A worker inspects a burnt garment Thursday after a fire broke out at a garment factory building in Dhaka, Bangladesh. Shortly before midnight Wednesday, a fire swept through a garment factory in the capital Dhaka, killing eight people, including its managing director and a top police official. Initial reports suggested the fire in the 11-story building was caused by a short circuit on the second floor, which spread to the third and fourth floor where the factory was located. SHARIFUL ISLAM, XINHUA, MCT
This photo illustration made last year shows labels of garments made in Bangladesh, India, China, and Pakistan that were bought at a Wal-Mart store in Atlanta. FILE PHOTO: THE ASSOCIATED PRESS
GoodGuide, which is staffed by scientists, chemists, engineers, nutritionists and life-cycle specialists, offers detailed information on how more than 170,000 products are made and what they contain. GOODGUIDE.COM

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